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Wednesday, June 25, 2008

I thought you might be interested in this article from the Wisconsin Club for Growth Wednesday newsletter. - James Wigderson

Badgercare Explosion

Astute observers of government programs recognize the pattern - government starts a new handout, and people flock to it like moths to a flame. The program grows and grows - and even if legislators choose to restrict the program’s growth, it is derided as a "cut."

This pattern is especially true in health care, where projections consistently underestimate the number of people that eventually take advantage of taxpayer funded health programs. According to Michael Tanner of the CATO Institute, in 1967, the House Ways and Means Committee predicted that Medicare would cost $12 billion in 1990. In reality, the program cost over $110 billion that year. In 1987, Congress estimated that the Medicaid Special Hospitals Subsidy would reach $100 million in 1992. The actual cost exceeded $11 billion.

Wisconsin health plans are no different. When the Badger Care program was instituted in 1999, it was estimated that program would serve 19,600 children and 22,800 adults, for a total of 42,400 enrollees. Yet when the program went into effect in 2000, the results were somewhat of a surprise. In the first quarter of enrollment, the program welcomed 23,151 new enrollees (6,298 children and 16,853 adults). By the end of 2003, that number had grown to 114,237 enrollees (37,839 children and 76,383 adults).

So it should surprise no one in Wisconsin that the newly created Badger Care Plus program has taken on thousands more enrollees than the 2007-09 budget projected. The program, instituted to cover more children under a state government health plan, had expected to sign up 26,000 more children and adults by June of 2009. Instead, the program has already increased by 75,500 – triple what had been expected a year from now. Where are all these people coming from? The answer may be found in a review of the application process.

The state and counties are supposed to require applicants to verify that they were uninsured for 12 months, however, nothing in their marketing of the plan informs potential enrollees of that requirement, and more egregious, is that this information isn’t even asked on the Badger care application form.. How can they enforce the requirement if they don't even ask applicants the question? For the insurers that have to process these applications, it doesn't appear they are able to determine if prior coverage existed. Is the State asking this question verbally? How can they possible verify that these 70,000 enrollees were uninsured for 12 months?

Creating a new government entitlement program and having lax application procedures is like lighting a bale of hay on fire. Soon, your barn is going to be engulfed in flames. And with the state's Medicaid budget already carrying a $78 million deficit that could very well happen with all these new questionable enrollees.